Coinspeaker
Crypto Firm Abra to Pay $82M in Customer Refunds over Licensing Dispute
Abra, a cryptocurrency platform, has reached a settlement with regulators from 25 US states, agreeing to refund up to $82.1 million to its customers. This follows investigations revealing that Abra operated without required licenses. States such as Washington, Texas, Georgia, and Ohio have opted to prioritize customer reimbursements over imposing fines.
As part of the agreement, Abra CEO Bill Barhydt will be prohibited from engaging in money transmission or similar financial services within these states for five years. Barhydt downplayed the settlement, stressing that no penalties were incurred and stating that no users suffered harm as a result.
Regulatory Investigation and Compliance Measures
The settlement follows an investigation by state regulators from Washington, Arkansas, Georgia, and Texas, who found that Abra was conducting crypto transactions through its mobile app without proper licenses. In response, Abra has barred US customers from purchasing, selling, or depositing cryptocurrency on its Abra Trade platform. As part of the settlement, Abra is required to refund any remaining cryptocurrency holdings to impacted customers.
Abra encountered heightened regulatory scrutiny in mid-2023. Texas state regulators issued the company a cease-and-desist order, alleging financial instability dating back to at least March 2023. The regulators further criticized Abra for allegedly making deceptive statements about investments in Abra Earn that could mislead the public.
In January, Abra resolved its issues by agreeing to reimburse frozen funds to its customers. During this period, Abra held approximately $13 million in cryptocurrency assets for more than 10,000 customers from Texas.
Charlie Clark, Chair of the Conference of State Bank Supervisors (CSBS), emphasized the crucial role of state financial regulators in safeguarding consumers and enforcing compliance with state laws, affirming that companies operating outside these regulations will face consequences.
Scaling Down in the US Market
Abra initiated a reduction of its operations within the United States starting June 2023, declaring a cessation of new user registrations for its US app and discontinuation of several consumer services nationwide. However, Abra clarified that its activities outside the US remain operational and unaffected. Despite encountering regulatory hurdles, Abra has continued to diversify its service portfolio.
Earlier this year, the company launched two new platforms “Abra Prime” and “Abra Private”. Abra Prime is designed to offer crypto investment services to institutional clients, including hedge funds and venture capital firms. Meanwhile, Abra Private focuses on providing tailored wealth management solutions to high-net-worth individuals. Both platforms have benefited from Abra’s recent approval by the SEC to operate as an investment advisor.
— Bill Barhydt (@billbarX) June 26, 2024
About Abra
Established in 2014 by Bill Barhydt, Abra provides a range of cryptocurrency services for retail and institutional investors. The platform features investment options such as Abra Earn and Abra Boost, which have faced scrutiny over potentially misleading claims. Despite these regulatory issues, Abra remains a prominent player in the crypto sector, consistently evolving and broadening its service offerings.
Crypto Firm Abra to Pay $82M in Customer Refunds over Licensing Dispute
